REGULATORY UPDATE: New Risk-Based Licensing Regulation Introduced

On 5 June 2025, the Indonesian Government has issued Government Regulation No. 28 of 2025 on the Implementation of Risk-Based Licensing (GR 28/2025), revoking the previous Government Regulation No. 5 of 2021 (GR 5/2021). GR 28/2025 now serves as the primary implementing regulation of Job Creation Law. This regulatory update aims to streamline licensing processes, resolve inconsistencies and comply with the amendments made to Job Creation Law. GR 28/2025 offers clearer guidance, promotes sectoral consistency, simplifies implementation and strengthens legal certainty for business actors. The question is: How does this regulation alter the current licensing landscape?

This article highlights the key updates of the GR 28/2025 compared to the previous GR 5/2021, such as the harmonisation of license terminology, regulatory leniency and exemptions, expanded sectoral coverage, and improvements in licensing framework and oversight. It also emphasizes the transition period during which GR 28/2025 takes effect and outlines the necessary actions business actors must undertake in response. This article highlights GR 28/2025 as the key implementing regulation shaping business compliance and operations moving forward.

KEY UPDATES

License Terminologies Harmonisation

GR 28/2025 provides clearer definitions of several technical terms to support the licensing requirements and procedures, in alignment with provisions set out under the sectoral regulations. This includes but not limited to:

• Conformity of Spatial Utilization Activities (Kesesuaian Kegiatan Pemanfaatan Ruang orKKPR);
• Building Construction Approval (Persetujuan Bangunan Gedung or PBG);
• Certificate of Feasibility Function (Sertifikat Laik Fungsi or SLF);
• Forest Area Utilization Approval (Persetujuan Kawasan Hutan or PPKH); and
• Environmental Approval (Persetujuan Lingkungan orPL),

which were not specifically addressed in GR 5/2021.

Licensing Prerequisites

Previously, GR 5/2021 referred ‘Basic Requirements’ mainly to the sectoral regulations e.g., building and environmental regulations. GR 28/2025, by contrast, sets out clearer and more specific provisions on the administrative steps preceding sector-specific requirements of the Basic Requirements (Persyaratan Dasar or PD), such as:

• PL;
• Technical Application (Pengajuan Teknis); and
• Supporting Business Licenses (Perizinan Berusaha untuk Menunjang Kegiatan Usaha or PBUMKU).

Sectoral regulation provisions on these matters remain valid, unless they conflict with GR 28/2025.

Leniency and Exemption in Licenses Issuance

For KKPR specifically, GR 28/2025 provides leniency for Micro Enterprises and Low-Risk Businesses, and exemption for Renewable Energy and Mineral & Coal Subsectors.

Micro Enterprises and Low-Risk Businesses	The KKPR for the business location is issued through the OSS system in the form of a self-declaration by the business actors.
Renewable Energy and Mineral & Coal Subsectors	The requirement for KKPR is waived for general business license (Perizinan Berusaha) at the survey and exploration stages in the new and renewable energy and energy conservation subsector, as well as at the exploration stage in the mineral and coal subsector.

Technical Aspects

With the enactment of GR 28/2025, the Indonesian government is also required to update both the technical aspects of the Online Single Submission (OSS) system and the Indonesia National Single Window (INSW) systems, which previously posed usability challenges to the business users.

The updated OSS subsystem now includes features to support PD’s commitment fulfilment, investment facility, and partnership-based business models. It also facilitates payment of Non-Tax State Revenue (Penerimaan Negara Bukan Pajak or PNBP) linked to approvals and conformity confirmations of spatial utilization activities (KKPR and related processes), including clear procedural guidance and expected completion timelines.

Expanded Sector Coverage

Further, GR 28/2025 broadens the regulatory framework to cover 22 sectors in total, consisting of 15 main sectors and 7 additional sectors, including geospatial information, creative economy, manpower, cooperatives (koperasi), foreign investment, Electronic System and Transaction Administration (Penyelenggaraan Sistem dan Transaksi Elektronik or PSTE) and environmental sector.

Notably, the regulation now includes, among others, programming activities based on AI and blockchain technology development activities under the PSTE sector; film, applications, games, culinary arts, design, and fashion under the creative economy sector; and a more detailed classification of map provision, geospatial mapping, and surveying under the geospatial information sector.

Restructuring of Licensing Authority

GR 28/2025 introduces a structural shift in how business licensing is handled, particularly by drawing a clear operational line between general business licenses (Perizinan Berusaha, i.e., Business Identification Number (Nomor Induk Berusaha or NIB), Standard Certificate, and License) and PB UMKU. This separation is not just procedural, it also reassigns responsibilities to distinct authorities, depending on the type of license involved.

Further reinforcing this separation, the regulation carves out tailored rules for special economic zones. In Free Trade Zones and Free Ports (Kawasan Perdagangan Bebas dan Pelabuhan Bebas), for example, licensing authority is no longer centralized but delegated directly to the Head of the KPBPB Management Agency. This shift is especially relevant for activities involving foreign direct investment or funding based on government-to-government agreements. The delegation aligns with Indonesia’s legal framework for special trade and port areas, ensuring regulatory consistency within these jurisdictions.

Post-Licensing Supervision and Sanctions

Post-licensing supervision is strengthened under GR 28/2025, with improved coordination across agencies and categorization into four types: general, sectoral, routine, and incidental. This replaces the previous focus on only routine and incidental supervision. GR 28/2025 further provides sector-specific administrative sanctions in cases of non-compliance with licensing obligations.

KEY CONSIDERATIONS GOING FORWARD

To help you stay on track during the transition to GR 28/2025, here are the key points to take notes:

1. New Standard Business Classification Code (Klasifikasi Baku Lapangan Usaha or KBLI) List: the issuance of GR 28/2025 resulted in the establishment of a new list of KBLI, increasing the number from 1,348 to 1,417 classifications.
2. Business licensing and PBUMKU: applications for Business Licenses and PBUMKU will continue to follow the procedures under GR 5/2021 until the updated OSS system becomes fully operational.
3. Standard Certificates: Any certificates that have not yet become effective, will continue to be processed under the GR 5/2021. For tourism businesses, make sure to update certificates through official certification bodies and upload them into OSS.
4. High-risk and accelerated licenses (Izin Percepatan): These also remain governed by GR 5/2021 during the transition.
5. Crypto asset supervision: The government agency responsible for the guidance, regulation, development, and supervision of futures trading will continue to oversee futures trading activities involving digital financial assets, including crypto asset, until full implementation of the new regime. The enactment of new Indonesian Financial Services Authorities (Otoritas Jasa Keuangan or OJK) regulation on the implementation of digital financial assets, including crypto assets, has transferred the supervisory role from the Commodity Futures Trading Regulatory Agency (Badan Pengawas Perdagangan Berjangka Komoditi) to OJK, as the government agency responsible for supervision.
6. Update your OSS access: Business actors who already possess OSS system access must update their account details as directed. Notifications will be sent via the registered email address associated with the OSS system.
7. New licensing terminology: Licenses and PBUMKU issued using the old terminology remain valid, but they must eventually align with the new format and terminology under GR 28/2025.
8. Export and import licensing: While the OSS and INSW systems are being updated (within 4 months), export and import licenses will continue to be processed through the electronic systems of the respective ministries or agencies.
9. Implementation timeline: supporting implementing regulations, as well as updates to the OSS and INSW systems, are expected to be completed within 4 months from the promulgation of GR 28/2025.

Should you have any inquiries related to this regulation or wish to ascertain its impact on your business or personal interests, please feel free to contact us. 

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